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Krugman: Is the Computer Revolution Coming To a Close? 540

Posted by samzenpus
from the end-of-an-era dept.
ninguna writes "According to Paul Krugman: 'Gordon argues, rightly in my view, that we've really had three industrial revolutions so far, each based on a different cluster of technologies. The analysis in Gordon's paper links periods of slow and rapid growth to the timing of the three industrial revolutions:
IR #1 (steam, railroads) from 1750 to 1830.
IR #2 (electricity, internal combustion engine, running water, indoor toilets, communications, entertainment, chemicals, petroleum) from 1870 to 1900.
IR #3 (computers, the web, mobile phones) from 1960 to present.
What Gordon then does is suggest that IR #3 has already mostly run its course, that all our mobile devices and all that are new and fun but not that fundamental. It's good to have someone questioning the tech euphoria; but I've been looking into technology issues a lot lately, and I'm pretty sure he's wrong, that the IT revolution has only begun to have its impact.' Is Krugman right, will robots put laborers and even the educated out of work?"
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Krugman: Is the Computer Revolution Coming To a Close?

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  • by sien (35268) on Wednesday December 26, 2012 @08:19PM (#42399769) Homepage

    Gordon's Paper has been thoroughly investigated [thebreakthrough.org] by Roger Pielke Jnr at the Breakthrough Institute.

    Gordon's smoothing of growth fails to show the variability and creates a picture of trends that are not really there. A quote from the article linked above:

    In short, there is no evidence of a stair step reduction in the growth rate of US per capita GDP in either dataset. The US BEA and Census data shows essentially no change (a linear trend, blue line, shows a statistically insignificant downward tick) whereas the Maddison data shows a bit of an increase (red line). The data is sensitive to the time period chosen – for instance, from 1970 the BEA/Census data shows an increase in the annual rate of per capita GDP growth. I can find no evidence of a post-1950 secular decline in per capita economic growth in the United States, and in fact, there is evidence that growth rates have accelerated a bit from 1970.

  • Re:Paul Krugman (Score:3, Informative)

    by clarkkent09 (1104833) on Wednesday December 26, 2012 @08:34PM (#42399909)

    I don't have a problem with the fact that his views differ from mine. I have a problem with dishonesty of a Nobel prize winning economist who misuses his column to push his own political agenda. It's easy to google many instances of deliberate twisting of facts and outright lies ("ACA will decrease rather than increase the deficit"), all without exemption leaning in the same political direction. If he was on MSNBC or Fox News it would be no problem. It is the pretense that his writing is a serious economic analysis distilled for popular reading rather than obvious and automatic pushing of a political agenda regardless of the facts that bothers me.

  • by jabberwock (10206) on Wednesday December 26, 2012 @08:34PM (#42399911) Homepage
    The poster can't read, or summarize.

    Here's the link to Krugman's column: http://krugman.blogs.nytimes.com/2012/12/26/is-growth-over/ [nytimes.com]

    And this means that in a sense we are moving toward something like my intelligent-robots world; many, many tasks are becoming machine-friendly. This in turn means that Gordon is probably wrong about diminishing returns to technology.

    Ah, you ask, but what about the people? Very good question. Smart machines may make higher GDP possible, but also reduce the demand for people — including smart people. So we could be looking at a society that grows ever richer, but in which all the gains in wealth accrue to whoever owns the robots.

    And then eventually Skynet decides to kill us all, but that’s another story.

    Anyway, interesting stuff to speculate about — and not irrelevant to policy, either, since so much of the debate over entitlements is about what is supposed to happen decades from now.
  • Re:Paul Krugman (Score:3, Informative)

    by Anonymous Coward on Wednesday December 26, 2012 @08:37PM (#42399935)

    To fight this recession the Fed needs more than a snapback; it needs soaring household spending to offset moribund business investment. And to do that, as Paul McCulley of Pimco put it, Alan Greenspan needs to create a housing bubble to replace the Nasdaq bubble. Judging by Mr. Greenspan's remarkably cheerful recent testimony, he still thinks he can pull that off. But the Fed chairman's crystal ball has been cloudy lately; remember how he urged Congress to cut taxes to head off the risk of excessive budget surpluses? And a sober look at recent data is not encouraging.

    - NYTimes, 2002 [nytimes.com]

    By 2005 or so, it will become clear that the Internet's impact on the economy has been no greater than the fax machine's.

    Red herring.com (1998) [archive.org]

    If we discovered that, you know, space aliens were planning to attack and we needed a massive buildup to counter the space alien threat and really inflation and budget deficits took secondary place to that, this slump would be over in 18 months. There was a Twilight Zone episode like this in which scientists fake an alien threat in order to achieve world peace. Well, this time, we don't need it, we need it in order to get some fiscal stimulus.

    Paul Krugman: Fake Alien Invasion [huffingtonpost.com]

    In July 2008 Nobel laureate Paul Krugman wrote that Fannie Mae and Freddie Mac (the GSEs) "didn't do any subprime lending, because they can't: the definition of a subprime loan is precisely a loan that doesn't meet the requirement, imposed by law, that Fannie and Freddie buy only mortgages issued to borrowers who made substantial down payments and carefully documented their income." (New York Times, July 18, 2008)
    How did Krugman get it so wrong? [realclearmarkets.com]

  • Re:Paul Krugman (Score:5, Informative)

    by Penguinisto (415985) on Wednesday December 26, 2012 @08:43PM (#42399967) Journal

    He's also a former adviser to Enron [wikipedia.org].

    Take from it what you will.

  • Krugman (Score:1, Informative)

    by Tailhook (98486) on Wednesday December 26, 2012 @09:15PM (#42400201)

    I forget more about the computer revolution every time I sneeze than Krugman will ever know. It's just beginning. Live 10 more years and a computer will drive you anywhere in North America and hump you on the way. We're about to wipe out 'higher' education as we've known it for centuries. Piers Morgan may not get voted off the island via Whitehouse petition [politico.com] but the fact that were having a global debate with Internet petitions [prisonplanet.com] to our respective governments isn't funny. We're still puttering along with a couple megabits of capacity in most of the Western world. Gibibit+ will enable use cases we haven't even suspected yet. The second or third next atavist-stan we get ourselves mired in will be fought in-part with armed autonomous bipedal robots. Media is being fundamentally changed [slashdot.org] on a daily basis. The interval between now and when Krugman's paper goes Newsweek [thedailybeast.com] and becomes a glorified blog is probably a lot shorter than the remainder of Krugman's career as a columnist.

    Krugman needs to stick to his welfare state statism.

  • Re:Paul Krugman (Score:3, Informative)

    by samkass (174571) on Wednesday December 26, 2012 @09:25PM (#42400269) Homepage Journal

    I don't have a problem with the fact that his views differ from mine. I have a problem with dishonesty of a Nobel prize winning economist who misuses his column to push his own political agenda. It's easy to google many instances of deliberate twisting of facts and outright lies ("ACA will decrease rather than increase the deficit"), all without exemption leaning in the same political direction. If he was on MSNBC or Fox News it would be no problem. It is the pretense that his writing is a serious economic analysis distilled for popular reading rather than obvious and automatic pushing of a political agenda regardless of the facts that bothers me.

    If you weren't completely wrong you'd have a point. His economic analysis is actually pretty spot-on, happens to agree pretty closely with the Democrats, and you just disagree with it. It's basic on sound economic theory (which differs from yours). And the ACA does decrease the deficit compared to the previous status quo.

  • Re:Paul Krugman (Score:5, Informative)

    by Alomex (148003) on Wednesday December 26, 2012 @09:30PM (#42400305) Homepage

    Not to mention defending Obamacare as a cost saving program,

    Which it is. There is nothing as inefficient as the current system we have. We pay twice as much as any other country in the world for no better outcome.

    openly lying about Ryan's voucher program

    The only person lying about Ryan's program was Ryan, since it wasn't even a program. There were unspecified massive cuts in his program, the equivalent of the slashdot 1)... 2)... 3)??? 4) Profit!

    Surprisingly the press fell for it much as you did too, with no one questioning what exactly step 3) would consist of. Krugman speculated that it would consist of massive cuts to social programs and thus indeed kill people, if we were to take Ryan at his word.

    He has zero credibility left except perhaps with deluded dailykos crowd.

    He provides confidential advice to governments all over the world, has a column in one of the most prestigious newspapers in the world, is a professor in one of the best universities in the country and is the winner of the Nobel prize of economics. Yeap, I can see the zero credibility all over the place.

    deluded dailykos crowd.

    You are projecting here. You might disagree with everything he says, but the dude has credibility up the wazoo.

    For example, I think Alan Greenspan. is a hack and at least 50% responsible for the current mess we are in (Bush being the other 50%) but I have no problem admitting that the guy's opinion still carries a lot of weight in many circles. More than I wish it did, but that's tangential to the point.

    You on the other hand don't seem to be able to make the simple distinction between what you wish the world was and what it is. Hence you delude yourself into believing that Krugman is irrelevant.

  • by conspirator23 (207097) on Wednesday December 26, 2012 @09:31PM (#42400313)

    The development of modern computing and telecommunications is not an industrial revolution of the type characterized by IR #1 and IR #2, and this is where Gordon's assumptions falter and Krugman's skepticism gains traction.

    The "I" in this case refers to Information not Industry, and it is the 2nd one. The 1st one was the development of the printing press. From this standpoint, IR #1 (the printing press and movable type) took centuries for it's impact to be fully realized. The depth and breadth of it's influence on western civilization is difficult to measure in "simple" macroeconomic terms. Likewise, IR #2 (the electronic digitization of information) is a revolution that is so fundamental in nature that I don't believe it lends itself to being mapped as cleanly as Gordon implies.

    Krugman starts the conversation in a couple of good spots: robotics and it's impact on GDP, and the potential of Big Data to drive decision making. What about desktop manufacturing (aka 3D printing)? MOOC? Genomics? Realtime translation?

    In fact the more that I think about it, the more I think that Gordon has successfully found an important trend, but has the wrong story to explain it. The first two Industrial revolutions owe their economic impacts to advances in our energy metabolism as a species. Gordon's IR#1 was about the conversion of hydrocarbons into mechanical energy using steam. Gordon's IR#2 was about the conversion of hydrocarbons into electricity using steam turbines, and into mechanical energy using internal combustion. Economic benefits from the digital revolution has much more to do with efficiency and productivity, and almost nothing to do with finding new sources of energy to exploit. Indeed we're using more energy than ever to push information around, but each joule expended has had a significant ROI from an economic standpoint. Consider Just In Time [wikipedia.org] production techniques, which are dependent on the ability to rapidly gather and disseminate information up and down the manufacturing supply chain. There's not a whole hell of a lot more efficiency that we're going to wring out of JIT. In fact, Japan's Tsunami disaster demonstrated that we are now SO optimized from an industrial standpoint that natural disasters in one part of the world can have nearly immediate impacts across the global economy. In other words, we have reached the point of diminishing returns on the productivity gains that digital information can provide to the industrial economy.

    So Gordon is wrong, but about the right things.

  • Re:Paul Krugman (Score:3, Informative)

    by marcosdumay (620877) <marcosdumay@@@gmail...com> on Wednesday December 26, 2012 @09:43PM (#42400401) Homepage Journal

    Is there a Nobel Prize in Economics!?

    That's news. When did the undead Nobel return from his grave to create it?

  • by Cyberax (705495) on Wednesday December 26, 2012 @09:49PM (#42400437)
    And they've missed the point. GDP is still growing, but the percentage of GDP growth that is passed to workers is _shrinking_. Instead, more and more of the growth goes to the capital owners. Some of that might be attributable to outsourcing, but IT is definitely one of the reasons.
  • by Stirling Newberry (848268) on Wednesday December 26, 2012 @09:51PM (#42400461) Homepage Journal
    1) What he labels as "the first industrial revolution" wasn't the first, and it only occurred for much its length in the UK, he drags down earlier eras by not adjusting for geography in the same way he does for eras he focuses on. The first European technological revolution begins in the 1500's, a period of time where wages double in real terms in urban centers and then double again. It would take another 130 years to double a third time.
    2) The second industrial revolution does not produce increased GDP in the form of steam engines until the 1840's by which time the telegraph is a major part of the information infrastructure to run railroads, so his IR#1, first, is really IR#2 and for most of the world is 1830-1860.
    3) Much of the period of so-called IR#2 is during the long depression. As with previous waves of industrialization or technological revolution, city centers grow rapidly, as it is much cheaper per person to extend infrastructure, and there are higher profits. The electrical economy does not penetrate much of even developed countries, as measured by penetration of electrical devices and their costs, until 1930-1950.
    4) In developed countries the rebound from WWII was the period of fastest GDP growth.
    In productivity terms, the information revolution was not visible until the mid-1990s, and there are still large productivity wins.
    Krugman is late to the party, and falls into the "lump of work" fallacy. The real problem here is that if there is a roughly constant standard of living as a target, the amount of work to be done will drop, and it will be less well paying. The only way to produce more work is to increase the demands on society. This will be opposed by those for whom the present standard is enough, and who enjoy its higher levels of benefit, but this is largely a political problem, for which political will is required. Economics can help ease transition forward, but it cannot generate political will from nothing.
  • by jcr (53032) <.jcr. .at. .mac.com.> on Wednesday December 26, 2012 @10:32PM (#42400731) Journal

    This is the guy who advocated the housing bubble as a remedy for the dotcom bubble. His policy prescription is always spend more, tax more, borrow more, regulate more. He has nothing at all to offer on this subject.

    -jcr

  • Re:Silly idealist! (Score:5, Informative)

    by LurkerXXX (667952) on Wednesday December 26, 2012 @10:48PM (#42400839)

    And even if it would, the rich will never abide huge taxes. They like being rich and intend to stay that way, and will not hesitate to use their wealth to achieve their political ends. Robin hood taxes will never fly, no matter how badly the lower classes want it.

    The tax rate for top earners in 1940 was 78%, so they've abided it before.

  • by Anonymous Coward on Wednesday December 26, 2012 @10:57PM (#42400871)

    Unfortunately, Krugman's Nobel prize was awarded for destroying a "straw man" argument. Again, politics degraded the prestige of the award.

    I've read every one of Krugman's books, and it baffles me how a supposedly well-educated person can come up with this stuff. (I read a LOT of Economics books, and it isn't just Krugman, unfortunately.) I strongly object to him stating that he is going to use Economic reasoning to make a point, then substitute, ex-cathedra, some political justification that cannot be supported by the argument.

    Here is where I'm coming from:

    First of all, I assume six rules of General Semantics (as simplified by Ken Keyes, Jr In his book,"Taming your Mind" http://www.amazon.com/Taming-Your-Mind-Ken-Keyes/dp/0960068872/ref=sr_1_53?ie=UTF8&qid=1356574942&sr=8-53&keywords=ken+keyes+jr).

    The rules are:
    "Up to a point" (Assumes that nothing is absolute; that things are true, false, black, white, etc., Up to a point at which the assumption no longer holds.)
    "To me" (Assumes that there is a personal dimension to the formation of every opinion, and the interpretation of every fact.)
    "As far as I know" (Assumes that there is a limit to the amount of knowledge about anything, and any opinon is only valid subject to the discovery of further evidence.)
    And, "What", "When" and "Where" indexes (Assumes that any topic or opinion is mutable in meaning, depeding on context.)

    I also place arguments into categories:
    Economic Philosophy (arguments about what Economics should be)
    Economic Science (arguments derived from observation, logic, statistics, etc.)
    Economic Technology (arguments describing how to achieve specific Economic results)

    The only arguments that really interest me fall into the Science category, but you need to be aware of the influencing other two categories in order to evaluate them.

    In Krugman's case, his Philosophical stance is "left-of-Keynes/pro-Socialist". If you evaluate his arguments from the point of view that this is correct, then his arguments hold water in most cases. However, modern Science shows Keynes and Socialism to have deleterious effects on the smooth functioning of economic behavior. It takes much intervention to make the technological results appear, and they are usually only temporary. Modern Economists have figured out that Keyenes' "General Theory" is, in fact, a very limited "special theory". To make it work (or to get the "desired" results) requires intervention of the sort that interferes with personal liberty and free choice. This mis-allocates resources and diminishes wealth and prosperity.

    Since Krugman is no dummy, I have to assume that he is aware of all this and his insistence on forwarding flawed solutions is based on his political beliefs rather than Economics. It is immoral to borrow legitimate authority in one area and use it for a personal agenda to the detriment of others (IMO), and that puts Krugman in category of "Liars" and "Con men" as far as I am concerned.

  • Re:Not really (Score:4, Informative)

    by VortexCortex (1117377) <VortexCortexNO@S ... t-retrograde.com> on Thursday December 27, 2012 @12:27AM (#42401331)

    It takes a -company- like Microsoft to bring the PC to the unwashed masses and all the ancillary technology that goes along with it. And it had to be an open platform. IBM almost succeeded in keeping the PC platform closed in a way that Apple succeeded in. Below are some facts.

    IBM and MS both worked on OS2, [wikipedia.org] which MS eventually named Windows NT. MS screwed their partner by introducing incompatibilities with OS2, as MS had done with DOS back when DR DOS was a competitor. IBM now advocates Linux. You're pretty far from the mark if you think it was MS that caused all the openness. It was Intel when they allowed "clones", for fuck's sake man. THINK.

    Without a world of Microsoft.

    1. GPUs wouldn't be as advanced today.

    Why's that? OpenGL existed [tomshardware.com] DirectX was never really needed, it was just yet another proprietary MS standard to assist with vendor lock-in. MS doesn't make GPU hardware, but the vendors now had to support two drivers instead of one. That means more work for no good reason -- even if they make a good DX driver and skimp on the OGL one, that's still extra wheel spinning for no fucking reason. Why would MS not use OpenGL instead of wasting time on DX? The early versions of DX was an OpenGL wrapper. There must have been some reason for MS to embrace and extend... OH! Extinguish. I'd say that was a step backwards. We could have had one really awesome cross platform driver stack, but because of MS that didn't happen. This means your selection of Games is dependent on the OS you use, which is fucking retarded in every sense of the word -- It's bad for gamers, it's bad for game devs, it's bad for hardware makers, it's bad for everyone but.... Microsoft.

    2. CPUs wouldn't be as advanced today.

    What? No. MS didn't make CPUs better. Chip makers did. In fact, because of so much proprietary Windows market share, and resistance to architecture changes meant that the bloated x86 had to stick around FAR longer than it was actually needed. For fuck's sake man, we have interpretors on the chip just to emulate rarely used instructions! That's not an advance! That's Retardation!

    3. Fuck it- **HARDWARE** wouldn't be as advanced as today.

    I might give you this one just for the hell of it. It's blatantly wrong, but for the sake of argument, Windows consumes more cycles than BSD, Linux, and some OSX versions. The consumers had to buy new hardware to run the bloat ware... "and there was much rejoicing. yay"

    4. You wouldn't have the Internet you're using today.

    "The Internet is just a Fad", Bill Gates. Seriously, they were pushing some other proprietary bullshit networking standard. Their decade long lag with IE6, and non adherence to standards is the scourge of every the web designer. We'd have had the web we have now, but Sooner and FASTER without MS's browser shenanigans, i.e., w/o IE.

    5. Smartphones wouldn't have advanced in technology because of all the aforementioned progress in fabrication R&D.

    Hahah, no. My PDA wouldn't have gotten faster without MS's R&D? I don't think so. Even if I gave you this one too, the progress would have been made by someone else. If Alexander G. Bell would have died at birth, we'd have had the Telephone one hour later. We had incandescent bulbs two years before Edison figured out which gas to put in them, others were doing the same work, but he had more money -- Someone would have replaced the vacuum bulb with argon, there's only so many known elements. MS could have never existed and nothing of value would have been lost.

    6. On and on and so forth....

    Bitch, moan, and whine about Microsoft all you want. But most people are not techno

  • by hawguy (1600213) on Thursday December 27, 2012 @01:02AM (#42401479)

    Horny teenagers have been in existence for about as long as teenagers have existed. There also isn't any, to my knowledge, reversible sterilization where the initial sterilization has a reasonable certainty it will be successful and the reversal has an equal chance to be reversed.

    http://www.plannedparenthood.org/health-topics/birth-control/birth-control-shot-depo-provera-4242.htm [plannedparenthood.org]

    99% effective when used as directed (one shot every 12 weeks), wears off and allows pregnancy after 6 - 10 months of no injections.

  • by neyla (2455118) on Thursday December 27, 2012 @02:50AM (#42401925)

    With cheap and guilt-free access to contraception that happens seldom, where anti-choicers don't run amok, there's also the option of abortion for the rare cases where birth-control fails. In contrast "purity balls" and bullshit like that don't work. USA is the outlier among first-world nations:

    http://www.nationmaster.com/graph/hea_tee_pre_sha-health-teenage-pregnancy-share [nationmaster.com]

    In USA, 22% of all 20-year-old females have given birth. The equivalent rate for Japan and Sweden are 2% and 3%. (and atleast for Sweden, most of -those- are conservative religious folks - drop that nonsense and the risk drops to sub-1% which is, if not ignorable, then atleast not a major reason for population-growth.

  • by nazg00l (699217) on Thursday December 27, 2012 @10:41AM (#42403569)

    That is... not true, at least for Poland. I happen to live there, you see, and health insurance does not expire with unemployement benefits. It is tied to unemployed *status*, not benefits, and as long as a person is registered as unemployed, they have their health insurance paid by the State, whether they are still eligible for the benefts or not.

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